Auditor Report of Siris Ltd.

Mar 31, 2010

1. We have audited the attached Balance Sheet of SIRIS LIMITED, as at 31st March, 2010, the Profit and Loss Account annexed thereto, and its Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India, Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. The annual financial statements under report were not reviewed by an audit committee in terms of Section 292 A of the Companies Act 1956.

4. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. a) Further to our comments in the Annexure referred to above, Attention is invited to the following :

I. Note No:3 of notes forming part of accounts, on the concurrence pending from the respective supply creditors for amounts aggregating to Rs. 49331905, for the credit backs from their accounts during the year 2006-07.

II. Note No: 16 of notes forming part of accounts, regarding confirmation / reconciliation of balances and consequential adjustment if any therefro *;;

III. No Provision for bonus has been made for the year ended 31st March 2010.

IV. Considering the fire accident in the factory in the month of April 08 resulted in temporary closure of the factory (Refer Note No. 2.2 of notes forming part of accounts), there is erosion in the value of the machinery basing on the revaluation by the Lenders Engineer during the year and cessation of operations during the year under report, we are unable to express our opinion whether the company can be considered as a "going concern" on the date of the Balance sheet.

V. Note No. 1.4 of notes forming part of accounts, regarding non-fulfilment of export obligation and its consequential liability thereon is not ascertainable on the date of Balance sheet.

VI. Management is unable to express the devaluation of the inventories and consequential impact on Cenvat Credit taken, VAT credit taken and Customs duty, as on the reporting date and hence the impact on the accounts cannot be ascertained.

b) Subject to the matters aforesaid in this paragraph:

(I) We have obtained the other information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books

(iii) The Balance Sheet, Profit and Loss account and the Cash-Flow Statement dealt with by this report are in agreement with the books of account

(iv) In our opinion, the Balance Sheet, Profit and Loss account and Cash-Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C)ofsection 211 of the Companies Act, 1956;

(v) m view of default by the company in repayment of its debentures and interest thereon, in our opinion the Directors of the company are as at 31st March, 2010 disqualified in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 from being appointed as Directors in other companies as per the Letter No.17/63/2003 CL V, Government of India, Ministry of Finance, dated 6th August, 2003.

6. In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit and Loss Account, subject to the matters referred to in paragraph 5(a) above the impact of which is partly not ascertainable, and read together with the other Notes, schedules and Statement on Accounting policies attached thereto, give the information required by the companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2010;

(b) in the case of the Profit and Loss account, of the Loss for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash flows of the company for the year ended on that date.

Annexure referred to in paragraph 4 of our report of even date

1.1 According to the information and explanations furnished to us, the Companys Fixed assets register is yet to be updated as at the date of Balance Sheet under report.

1.2 According to the information and explanations furnished to us, the company has not physically verified its fixed assets during the year under report.

1.3 According to the information and explanations furnished to us, during the year, the company has not disposed of a substantia! part of its fixed assets during the year.

2.1 According to the information and explanations furnished to us, the company has not carried out physical verification of Raw materials during the year under report, and there were no stocks of finished goods and stores and spares at the Balance Sheet date.

2.2 In our opinion based on the information furnished to us, the procedures followed by the company for verification of its inventories are not reasonable and adequate in relation to the size and nature of its business

2.3 According to the information and explanations furnished to us, the company maintained proper records of its inventories, and no major discrepancies were noticed during the year between such records and the inventories. .

3.1 According to the information and explanations furnished to us, the company has not granted any loans to companies, firms or other parties covered by the register maintained underSection 301 of the Companies Act 1956, at the beginning of the year or during the year, and consequently, reporting under sub-clauses b, c and d of clause 4(iii) of the Order does not arise during the year.

3.2 According to the information and explanations furnished to us, the company has taken loans aggregating to Rs.35,89,338( maximum balance during the year Rs36,80,338) atthe date of the Baiance Sheet, from two parties covered by the register maintained under section 301 of the CompaniesAct1956

3.3 According to the information and explanations furnished to us, there are no stipulations as to the repayment of the principal and interest amounts on the loans taken by the company from the persons covered by the register maintained under Section 301 of the Companies Act 1956. Hence we cannot report on the regularity of repayment of the principal/interest.

4. In our opinion, based on the information furnished to us, the companys internal control procedures, with regard to purchases of inventory, fixed assets and for sale of services, need to be improved to make them adequate for and commensurate with the size of the company and the nature of its business. However we are of the opinion that there were no major weaknesses in the said system that continued to remain without correction.

5.1 According to the information and explanations furnished to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

5.2 !n our opinion and according to the information and explanations furnished to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made on reasonable terms having regard to the present circumsances in which the Company is operating.

6. According to the information and explanations furnished to us, the company has not accepted any deposits covered under the provisions of Section 58A and 58AA of the Companies Act, 1956. However, in respect of the moneys accepted by the company from its directors during the year, it does not have details whether such moneys have been given out of their own sources or not. Further, according to the information furnished to us, no order has been passed on the company by the Company Law Board for non-compliance with the provisions of Sections 58A and 58AAof the Companies Act, 1956.

7. The company did not have a system of internal audit during the year.

8. According to the information and explanations furnished to us, the company has not maintained cost records as required under the provisions of section 209 (1) (d) of the Companies Act, 1956,

9.1 According to the information and explanations furnished to us, the company was not regular in depositing with appropriate authorities undisputed statutory dues like Provident Fund, Investor Education Protection Fund, Employees State Insurance and Sales Tax, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. The statutory dues outstanding more than six months are given hereunder:

Name of the Nature of the Amount statute dues Rs.

Provident Fund Employers and 8 38 373 Act employees contribution

Income Tax Income Tax and 27,26,794 Act 1961 Interest thereon 55,56,461



Name of the statue Period to which Due date the amount relates

Provident Fund Act August 2009 NIL

Income Tax Act 1961 1998-99 1999-2000

9.2 In our opinion based on the information and explanations furnished to us, there were no amounts of Sales Tax, Excise duty, Service tax, Customs duty, Cess, Incorpe Tax, Wealth Tax, pending remittance on account of their being disputed by the company, except the following:

Name of the Nature of Amount.disputed Period to Forum where dispute statute the dues and unpaid which the is pendng Rs. amount relates

AP Sales Tax- Sales tax 15,53,808 1998-1999 S.T.A.T., Hyd Act

-do- -do- 33,52,846 1999-2000 -do-

-do- -do- 28,89,995 2000-2001 -do-

-do- -do- 29,51,376 2001-2002 -do-

Central Sales -do- 93,97,091 1992-1993 -do- Tax Act

-do- -do- 9,49,427 1996-1997 -do-

-do- -do- 41,85,531 1997-1998 -do-

-do- -do- 18,71,667 1998-1999 -do-

-do- -do- 40,24,091 1999-2000 -do-

-do- -do- 33,87,516 2000-2001 -do-

-do- -do- 4,21,618 2001-2002 -do-

Customs Act Customs 8,32,667 1998-1999 AP High Court 1962 duty

-do- -do- 38,21,500 1998-1991 FEMA Tribunal Delhi

10. According to the information and explanations furnished to us, the accumulated losses of the company have exceeded fifty percent of its net worth on the date of the Balance Sheet under report. The company incurred cash losses during the financial year covered by this report and incurred cash losses in the immediate preceding year.

11. In our opinion and according to the information and explanations furnished to us, by the company, the company has not obtained any term loans from banks and financial institutions, during the year and there were no such loans outstanding at the date of the Balance sheet. Hence, the reporting requirement under clause 4(xi) of the Order does not arise during the year.

12. In our opinion and according to the information and explanations furnished to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the company is not a chit fund or a nidhi mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

14. In our opinion, the company is not dealing in or trading in shares, securities debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

15. According to the information and explanations furnished to us, the company has not given any guarantees for loans taken by others from banks or financial institutions.

16. According to the information and explanations furnished to us, the company has not raised any term loans during the year under report.

17. According to the information and explanations furnished to us, and on an overall examination of the balance sheet of the company, we report that the no funds have been borrowed on short-term or long-term basis during the year.

18. According to the information and explanations furnished to us, the company has not made any preferential allotment of shares during the year to parties and companies covered by the register maintained under section 301 of the Act, or to any others.

19. According to the information and explanations furnished to us, during the period covered by our audit report, the company has not issued any debentures.

20. The company has not raised any moneys through public issue during the year under report.

21. During the course of our examination of the accounts of the company in accordance with generally accepted auditing practices, we have not come across any instance of fraud on or by the company, nor have we been informed by the management, of any such instance being noticed or reported tiurng the year.

For Brahmayya & CO

Chartered Accountants

Firm Regn. No. 000513S

Sd/-

(T.V. RAMANA)

Partner ICAI Memb.No.200523

Date : 1st December, 2010

Place : Vijayawada